How Do Buy Here Pay Here Dealerships Work?

Car dealerships come in all shapes and sizes. Buy Here Pay Here (BHPH) dealerships offer customers a one-stop shopping experience where they can secure car financing and buy a car all the same place. In this post we’ll go over the differences between BHPH businesses and traditional car dealerships.

How do car dealerships work?

When you’re shopping for a car you have two options: you can either buy a used vehicle from a private seller or you can make the purchase through a dealership.

Car dealerships are the bridge between vehicle manufacturers and the public. They buy inventory directly from car makers and sell the vehicles to make a profit. Depending on where you go, a dealership might specialize in a certain car brands or might deal exclusively with new or used vehicles.

When you buy a car from a private seller, the price they offer is usually what you’ll end up paying — unless the seller is open to haggling. Dealerships can be more flexible with price because they want to move their inventory quickly to make room for new vehicle models. They can also offer price drops through manufacturer incentives and seasonal deals.

What is Buy Here Pay Here?

Buy Here Pay Here, also known as in-house financing, is a business model that streamlines the car buying process for the customer. Instead of requiring financing from a bank or other third-party lender, a BHPH dealership offers its own financing program.

Through this kind of program you receive a loan from the dealership and then use that money to buy a vehicle on their lot. Over the course of the loan you would make your monthly payments to the dealership.

Birchwood Credit Solutions is an example of a Buy Here Pay Here dealership because we lend our own money directly to customers. Because of this, we have a higher rate of approval and can offer competitive rates for shoppers with less than perfect credit.

How are Buy Here Pay Here dealerships different?

At a traditional dealership, you visit the lot first and pick out the car you want before heading to the bank to set up financing. At a BHPH dealership you usually sit down with financing staff first to get pre-approved for a car loan and then head out onto the sales floor to pick a car based on your financing.

However, more and more traditional dealerships are starting to offer in-house financing. While they may not explicitly advertise that they’re a Buy Here Pay Here dealership, you might notice signage that says “we finance” or “financing here.”

What are the benefits of a Buy Here Pay Here dealership?

Getting your financing at the dealership is beneficial for some shoppers. Here are a few pros of buying a car at a BHPH dealership:

Flexible requirements: Compared to banks, BHPH dealerships are less picky about who they lend money to. In most cases, your credit score is less important than your income.

Simplified process: Since you get the loan and maker the purchase at the same place, you don’t have to make financing appointments all over town to buy a car.

More approvals: BHPH dealerships approve financing for folks that are turned away by traditional lenders, making it easier for someone with bad credit to buy a car.

Credit building: Credit and car loans are a bit of a chicken and egg scenario. They’re great for building credit, but you need good credit to be approved for a car loan. BHPH financing can help folks with bad credit improve their credit score — as long as they report payments to the credit bureaus.

Is a Buy Here Pay Here dealership a good idea?

It doesn’t hurt to explore your options and look into financing through other avenues. But, if you have bad credit and have been turned down for a car loan elsewhere, a Buy Here Pay Here dealership can offer a clear path to vehicle ownership.

Buy Here Pay Here dealerships explained

Every car dealership has its own way of doing business. Buy Here Pay Here dealerships sell vehicles and extend financing directly to their customers, while traditional dealerships require financing from a bank or third-party lender.

BHPH financing can be a good option for people with bad credit who can’t qualify for traditional car loans because they have flexible requirements and a high rate of approval. These programs streamline the car buying process and helps a wider section of the population buy a vehicle.

Birchwood Credit Solutions is one of the only dealerships in Manitoba that offers true Buy Here Pay Here financing because we lend our own money. Give us a call today or fill out an online application to find out how easy car shopping can be.